Carefully reading the fine print before deciding to take up a short-term loan from either a bank or a micro lender will not only help you in making an informed decision, but is critical because the loan offering of the different institutions differ vastly. Also, before you decide to take a short-term loan, make sure that there are no other avenues that you can explore, as short-term loans – especially if they are unsecured – can put you at risk.
When deciding about any financial matter, first discussing it (including the need to take up a short-term loan) with a professional and independent financial advisor is a good starting point. With vast experience and wide knowledge about a variety of financial products as offered by all financial institutions, they are able to advise on the upside and downside of short-term loans and providers thereof, especially when it comes to unsecured loans.
Banks offer mostly secured short-term loans. Other institutions that offer short-term (cash) loans are micro lenders. Still other short-term loans that are available are called ‘payday loans’ – these are essentially a credit advance given on your salary when payday is too far away and you need money immediately. These can also be unsecured loans, meaning that no documentation is required to be provided by the borrower in case of the best laid plans of mice and men going awry and leading to you default on your monthly repayments.
In search of unique options for short-term loans in Cape Town, a unique product and service offering that has reportedly assisted more than 200 000 customers to find a suitable lender or broker countrywide, jumped out from the myriad of short-term loan offerings in this beautiful part of South Africa.
Operating through a Call Centre located in Cape Town, their products and services are available to South Africans countrywide; applications are accepted online and through the Cape-Town based Call Centre. The uniqueness of the service is the fact that assisting customers with short-term (unsecured) loans is not the main focus of the business, but rather a free offering when the customer buys into the legal products at a nominal once-off fee. The service aims to assist South Africans who find it difficult to secure short-term financial assistance because of a poor credit rating or difficulty in proving income. Customers with court judgements and defaults against their names, as well as repayment arrears and a poor credit history, are included as target markets.
The service is a ‘buy one service, get another one free’. Customers who buy into the legal products for a nominal, once-off fee get access to a free unsecured loan finding service. Upon the application for legal services and products being approved, the customer is matched with money lenders or brokers than then help them to find an unsecured loan that will fulfil their short-term financial needs. Customers also get a once-off full and detailed credit report, valid for 24 months, and that affords them a bird’s eye view of their credit profile at the time. Legal services and products offered and that customers buy into include general legal advice as well as legal advice pertaining to identity fraud, loss or theft. This advice is offered via a 24-hour telephonic advice line, manned by qualified and expert in-house attorneys.
Subscribing to, paying for and being accepted for the legal offerings are prerequisites for access to the financial services, which are not available as an alone-standing offering. While South Africans older than 18 years with a steady monthly income are invited to apply for subscription to the service, it is worthwhile to note that customers older than 65 years as well as those not earning a monthly salary or who are under debt review are among a list of individuals who cannot be assisted. Involving a spouse is voluntary.
While loan amounts ranging from R2 000 to R150 000 are offered by suitable moneylenders, it is important to note that a number of criteria still apply when deciding on a suitable amount, including your personal circumstances and – an important one – subject to the moneylender or broker. Pay-out is set at between three and five days from the date of your subscription to the legal services being approved and the repayment period is anything between 12 and 72 months, but subject to the Terms & Conditions of the specific moneylender. Cancellation is punted as a last resort given the value of the service offering, but can be done through Customer Service.
This year, the potential harm of unsecured loans to the economy was highlighted by the Marikana tragedy as well as what transpired and is now known as the African Bank saga earlier this year. If nothing else, it has highlighted the fact that unsecured lending – no matter how well and attractively packaged – should be approached with extreme caution. It should also only be considered as an option when extensive research, as well as objective advice from an independent financial advisor, point out that it is the only and best option available and that no other product or service can successfully fulfil a customer’s unique financial needs.